AgriFood Working Paper 2023:1

Saving countryside shops - does government support increase survival and economic performance of grocery stores in rural Sweden?

We evaluate a place-based policy aimed at commercial service providers in Sweden. In 2016, the Swedish government introduced a special operating support for grocery stores in remote rural areas with the intention to slow down the process of grocery store closures. We investigate the effects of the support in a Regression Discontinuity Design (RDD) framework by using a distance criterion that determined if stores qualified for the support.

Stores located at least 15 kilometres away from another store could apply for the support whereas stores located closer to each other could not. Thus, the local causal effect of receiving the support can be estimated. The results indicate a 15-20 percent increase in store survival rates due to the support. For surviving stores, the effects on employment are negative, possibly due to labour being replaced by capital investments. Such labour substitution appears to be more pronounced for smaller stores.

För en populärvetenskaplig version på svenska se AgriFood Policy Brief 2023:2